An economic principle that explains why countries produce different goods and services is
A)absolute advantage.
B)trade as a percentage of GDP.
C)comparative advantage.
D)NAFTA.

Question

Quizplus · Accepted Answer

Comparative advantage is the economic principle that explains why countries produce different goods and services. This principle states that a country should specialize in producing and exporting goods and services in which it has a lower opportunity cost than other countries, while importing goods and services in which it has a higher opportunity cost. This leads to increased efficiency and overall gains from trade.

Option A (absolute advantage) is a related concept that refers to a country's ability to produce a particular good or service more efficiently than another country. However, this principle alone does not necessarily explain why countries produce different goods and services.

Option B (trade as a percentage of GDP) is a measure of a country's openness to trade, but it does not directly relate to the economic principle of comparative advantage.

Option D (NAFTA) is a regional trade agreement between the United States, Canada, and Mexico, and while it may facilitate trade between these countries, it does not explain why countries produce different goods and services.

An Economic Principle That Explains Why Countries Produce Different Goods